The new federal tax law, signed into effect just before Christmas by President Donald Trump, will have disastrous consequences for people with disabilities and the organizations that serve them. The $1.5 trillion tax overhaul is the most sweeping set of changes in decades to federal tax law.
Dozens of Minnesota nonprofits, including many groups that serve people with disabilities, weighed in against the law before it was passed by the House and Senate. They criticized the end result of massive benefits to corporations and wealthy Americans, at the expense of many others. The tax cuts are expected to add $1 trillion to the nation’s deficit, putting health care and other critical services in the bullseye for cost savings. Crucial human services support programs including Medicaid, Medicare, Social Security, food programs and other needed supports could soon see themselves in the cross-hairs.
The Minnesota Council of Nonprofits, representing more than 2,000 nonprofits, pointed out that the state’s nonprofit community employs nearly 12 percent of Minnesota’s workforce. “The harm caused by this tax proposal will be dramatic, particularly to children, retirees, people with disabilities, workers and families,” said Rebecca Lucero, the council’s public policy director. She called the bill a “perfect storm” for nonprofits.
The list of worries about the tax package is long and complex. The Congressional Budget Office analysis forecasts 13 million fewer Americans will receive health coverage because the individual mandate to have health insurance of the Affordable Care Act was repealed. This includes five million fewer people enrolled in Medicaid, with an estimated 12,500 fewer people enrolled in the east metro area of the Twin Cities alone, according to the Amherst H. Wilder Foundation. As fewer younger, healthier people enroll in programs premiums would likely rise for everyone else.
Groups that work on housing issues and homelessness predict those struggles will increase as crucial tax credits and programs are eliminated, including the tax exemption for private activity bonds. Hundreds of thousands of potential new affordable housing units could go unbuilt.
Businesses that sell medical devices worry about taxes on those needed items if a current exemption isn’t extended.
Looming cuts to Medicaid and Medicare?
Access to health care through Medicare and Medicaid could be further hampered by looming cuts. “The tax bill awaiting passage in Congress adds to the deficit, will increase the cost of health-insurance, and opens the door to massive cuts to Medicaid, Medicare, and other programs that offer vital support for people living with a mental illness,” said Sue Abderholden, executive director of National Alliance for the Mentally Ill (NAMI) Minnesota, “Our mental health system is still under construction and any cuts to public programs like Medicaid will be particularl devastating for people living with mental illnesses and their families.”
Alicia Munson, senior policy director of The Arc Minnesota, said the tax law would cause “major harm” for Minnesotans with disabilities and their families. “The $1 trillion spike in the deficit that this bill will create is roughly the same amount of money that would be cut from Medicaid if the House and Senate leaders’ budget blueprint was passed into law. Medicaid is a lifeline for our citizens with disabilities and their family members; it makes it possible for them to be included in their communities and provides life-saving medical care,” she said.
“Drastic cuts in the Medicaid funding would force our state leaders to make impossible choices. It would mean cuts in services that help parents keep their children with disabilities at home, in supports that keep adults with disabilities out of institutions, in medical care that keeps people with disabilities of all ages healthy, or all of the above,” said Munson.
NAMI Minnesota cites the impacts Medicaid cuts would have on people with mental illness. For many people living with a mental illness, Medicaid pays for treatment – medications, therapy, ACT teams, ARMHS services and more – that helps people recover and live well in the community. Cuts to Medicaid to pay for lower tax rates will have negative consequences that will harm people with a mental illness.
Minnetonka-based St. David’s Center for Children worries about the loss of services for families with children with disabilities. Potential cuts to programs like Medicare and Medicaid would mean many of St. David’s Center’s children and families could not access the critical services they need to thrive. “It’s terrifying to me,” says client Cindy Klossner. Cindy’s four-year-old grandson Kellen receives services at St. David’s Center for autism and the effects of exposure to lead as an infant. Tax cuts could mean Kellen could no longer access the services that have changed his life. Without them, she said, “I can’t imagine the kinds of limitations he’d face in school and in life longer term.”
Nonprofit housing and care providers said the new tax law not only will hurt those they care for, it will also hurt employees who often work more than one job to make ends meet. “At Hammer Residences, each individual we support relies on Medicaid funding daily,” said a statement from the housing and support services organization. “Whether they live with a disability or have a pre-existing condition, the potential loss of funding if Medicaid is cut would be devastating. Additionally, the losses to Hammer as an agency would be staggering.”
Mount Olivet Rolling Acres is a Minneapolis area disability services organization, providing crisis support services, case management, and residential and in-home supports for children and individuals with mental health issues, intellectual and developmental disabilities, and physical disabilities. In 2017 alone, it supported more than 800 individuals, with almost all funding from the Medicaid program. Its clients tend to be lower functioning, have higher medical needs, and are aging. Many are nearing retirement age, require 24/7 supports and have parents or guardians who are no longer able to afford their care. “In an industry that already faces challenges like low wages, staffing shortages, and a lack of viable resources, further cuts to Medicaid would be detrimental, and result in the loss of services, lower quality of life for the clients supported, and a possibly elimination of jobs,” said Mount Olivet Rolling Acres, President, Tracy Murphy.
Other changes spark fears
Another great fear is centered on how changes to the tax laws would negatively impact charitable giving, which could be reduced by as much as $13 billion. Many nonprofit face decreased giving, as a result of changes to tax itemization. Some estimates put the drop in charitable gaining at as much as $13 billion.
One of many groups fearful of that impact is Can Do Canines, a New Hope organization that provides specially trained assistance dogs for people with a wide variety of health issues. “We depend heavily on donations from individuals to continue to do this work without charge to our clients,” Can Do Canines said in a statement “The new legislation will significantly impact us because many people will no longer get tax deductions for contributions, reducing the size and frequency of their gifts. Fewer contributions mean fewer dogs for people on our already-long waiting list.”
Minnesota Organization on Fetal Alcohol Syndrome (MOFAS) Executive Director Sara Messelt said, “We are also very concerned about the proposed reduction in tax incentives for charitable giving. While all people make contributions to non-profits because they believe in the mission, maintaining the tax incentive to give creates stability for the essential work of the non-profit sector.